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M3 Inc., the nation’s top-performing blue-chip stock this year, is poised to climb further in the long run thanks to rising demand for online health care services, investors say.

The company’s shares are up 84 percent in 2020 after rallying 124 percent last year, helped by its addition to the Nikkei 225 Stock Average on Oct. 1.

The stock has surged some 6,400 percent since it was listed in September 2004, logging at least seven times the growth of all others currently listed on the blue-chip gauge over that period. It’s currently valued at around $39 billion.

M3’s drug-marketing platform saw orders jump 2.5 times year-on-year in the April to June quarter as social-distancing rules enforced to contain the spread of the novel coronavirus severely hobbled physical drug-sales activities.

Further, increased regulations in Japan regarding entertainment of doctors by medical representatives have also acted as a tailwind for the firm. The company was originally a spinoff from Sony Corp., which still retains about a third of its ownership.

The massive gains have M3’s stock trading at 111 times estimated earnings for its next fiscal year, and the shares dropped 9.4 percent in six-straight losing sessions through Friday amid market concerns over pricey stocks.

Still, Richard Kaye of Comgest Asset Management Japan Ltd. says its appraisal shouldn’t be based on short-term valuations.

“We think M3 can outgrow any analyst estimates which we see, and its valuation should reflect that long-term potential,” said Kaye, Japan equity analyst and portfolio manager at Comgest, which owns about 2.9 million M3 shares according to Bloomberg data. “The company has demonstrated its ability to grow earnings rapidly and consistently and we should value it on future earnings,” he said.

Ryotaro Hayashi, an analyst at Morgan Stanley MUFG Securities Co., recently raised his price target 30 percent to a street-high ¥7,500, saying the positive story for the stock “remains alive and well.” It closed at ¥6,090 on Friday.

“Changes wrought by COVID-19 in the pharma and medtech industries are ongoing, and if anything accelerating,” which provide tailwinds for M3’s online drug-marketing platform as well as its new consumer telemedicine tie-up with Line Inc., the analyst wrote in a Sept. 2 report.

A number of smaller players with related businesses have also seen big stock gains this year amid the virus crisis, with Carenet Inc. more than tripling and Medpeer Inc. gaining 132 percent.

Smaller firms may be able to build niche markets but it will be hard to compete with the scale of M3’s network, according to Julia Angeles, a fund manager at Baillie Gifford & Co., which holds an 8.85 percent stake in M3 on behalf of its clients.

M3 represents a “disruptive approach to marketing,” said Angeles, who helps manage $57 billion for Baillie Gifford.

The company’s strength is its subscription base encompassing 80 percent of Japan’s doctors, and it is leveraging that network to drive additional revenue streams, such as patient recruitment for clinical trials, she added.

While health stocks count among the world’s best performers this year because of the pandemic, the emergence of widely available and affordable treatments or vaccines could take the steam out of their rally. Baillie Gifford however has a longer-term perspective.

“I don’t think there is a bubble in health care,” said Angeles, who is lead manager of the firm’s Worldwide Health Innovation Fund. She sees the sector as “so much behind other industries” in adopting new tools that interest should remain strong even after the virus abates.

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